The Satyam Computer Services scandal had an impact on shareholders in the U.S., but also in the company's home country of India. Known as "India's Enron," the case spurred Indian shareholders to try to come together to obtain compensation for their losses -- but they were stymied by the fact that India has no class action-type laws in place for shareholders to proceed under.

In the U.S., Satyam shareholders were able to secure a $125 million settlement with the company in the wake of the fraud coming to light. As discussed in an article in Forbes India ("Class Action Suits Are Up Against Challenges"), however, Indian shareholders have had no such luck. With no class action option, Satyam shareholders tried to file cases "under the guise of public interest litigations" but had these claims rejected by the National Consumer Disputes Redressal Commission and the Supreme Court in India.

In the future, injured shareholder may have better options as the new "Companies Bill" in India is expected to provide for class actions. However, Forbes India points out that (1) the absence of plaintiffs' law firms in India to organize lawsuits; (2) an Indian ban on contingency fee cases; and (3) the "prohibitive cost of filing suits in India" will all hinder any future shareholder lawsuits even after the passage of the Companies Bill.

Topics